Today, we bring you our updated overview of the indebtedness and capital structure of Slovenian companies that comprise the SBITOP index using the Q1 2024 results. It should be noted that we excluded NLB Banka, Triglav, Sava Re, and Equinox from this comparison due to the nature of their business operations.
At the same time, Cinkarna Celje and Krka operate with negative net debt, meaning their cash positions (short-term financial assets plus cash and cash equivalents) exceed their financial debt. Consequently, they were excluded from the net debt/EBITDA graph. Among the remaining Slovenian blue chips, Petrol has the highest net debt/EBITDA ratio at 1.8x. For several quarters, Petrol had been reducing its net debt/EBITDA ratio through improved EBITDA. However, in the first quarter of 2024, the company reversed this trend and recorded a higher ratio. Despite reducing its net debt by EUR 4.4 million compared to the end of 2023, Petrol’s EBITDA decreased by EUR 9.9 million (17% YoY), causing the ratio to rise. The decline in EBITDA resulted directly from a 19% YoY drop in sales revenue, driven lower sales on Other European markets. Slovenia petrol margins are still quite unfavorable which has resulted in decrease of EBITDA. Also EBITDA was down due to price regulation of natural gas in Slovenia and Croatia while compensation has not yet been received due to lack of approval for reimbursements from regulators/states. However, from a valuation perspective, one can conclude that the market already priced in expected further recovery/growth in Petrol’s profitability, taking the Group’s current P/E ratio of 21.56x into account.
Telekom Slovenije has a net debt/EBITDA ratio of 1.6x, a slight increase compared to the end of 2023. This change primarily stems from an increase in net debt, which grew by EUR 31.9 million (8.9%) since the end of 2023. Although TTM EBITDA experienced a 2.4% QoQ growth, translating to EUR 5.4 million in absolute terms, this increase was significantly lower than the rise in net debt. Given that Telekom Slovenije operates in the telecommunications industry, substantial investments in new infrastructure necessitate considerable cash, often financed through debt. As a result, the company’s net debt is relatively high compared to its EBITDA.
Net Debt/EBITDA
Source: LJSE, InterCapital Research
Among the observed companies, Luka Koper has the lowest net debt/EBITDA ratio at 0.3x, a slight increase since the beginning of the year. This increase is due to a rise in net debt by EUR 1.8 million (6.6% QoQ) coupled with a decrease in TTM EBITDA by EUR 1.7 million (1.8% QoQ).
The graph below illustrates how much additional debt the companies could take on to reach a net debt/EBITDA ratio of 3x, a threshold considered a red flag for indebtedness in the region. Krka, which has negative net debt due to its substantial cash holdings, could take on the most additional debt, exceeding EUR 2 billion.
Potential Additional Debt (EURm) to reach 3x EBITDA
Source: LJSE, InterCapital Research
We also examined the capital structure of the observed companies. Cinkarna Celje leads with virtually 100% equity, followed by Krka with 99.4%, Luka Koper with 84.1%, Petrol with 62.6%, and Telekom Slovenije with 61.5% equity in their financing structures. In the latest quarter, no major changes occurred in the capital structure of Slovenian blue chips.
Capital Structure of Select SBITOP Companies
Source: LJSE, InterCapital Research
